Nepal US Relations

Diplomatic Relations

Nepal and the United States of America (USA) established the diplomatic relations between them on 25 April 1947. Nepal established its Embassy in Washington D.C. on 3 February 1958. On 6 August 1959, American Embassy in Kathmandu was opened. A number of Nepal’s honorary consuls have been appointed in various US cities.

Exchange of Visits

High level visits have served to further cement the bilateral relations between Nepal and the United States of America. Prominent visits to Nepal from the US include the visits of US First Lady Hillary Clinton in 1995, Assistant Secretary of State Christina Rocca in 2001, 2002, 2003 and 2005, Secretary of State Colin Powell in January 2002, Richard Boucher, Assistant Secretary of State in May 2006, November 2006 and February 2009, Under Secretary of State Henrietta Fore in March 2007, Assistant Secretary of State for South and Central Asian Affairs Mr. Robert O. Blake on June 12-13, 2009 and on 11 September 2012, Under Secretary of State for Political Affairs Wendy R. Sherman on April 4, 2012 and Under Secretary of State for Civilian Security, Democracy, and Human Rights María Otero from November 17 to 19, 2012 and on February 12 to 14, 2012.

Similarly, former US President and a Nobel laureate Jimmy Carter paid a visit to Nepal from 13-16 June 2007 in capacity of Founder of the Carter Center. He repeated his visits on November 20-24, 2007 and April 6-14, 2008 

The CEO of Millennium Challenge Corporation (MCC) Ms. Dana Hyde visited Nepal on 10-12 February, 2015 and briefed about the MCC’s decision and potentiality of various sectors in which the aid can be utilized to Ministers and high level dignitaries.

Important visits to USA from Nepalese side include the visits of late King Birendra and late Queen Aishwarya in December 1983, the then Prime Minister Sher Bahadur Deuba from May 6 to 11, 2002.

Hon. Deputy Prime Minister and Minister for Foreign Affairs Mr. K.P. Sharma Oli (September 2006) met with the Secretary of State Dr. Condoleezza Rice. Mrs. Sahana Pradhan (September 2007) visited the US in capacity of Minister for Foreign Affairs.

Development Cooperation 

The USA is one of the first countries to extend development assistance to Nepal. The development cooperation harks back to 1951 when it supported Nepal with its Point Four Program. USAID/Nepal is the development assistance arm of the US Mission to Nepal. Various sectors such as transport, communication, public health, family planning, malaria eradication, agriculture, forestry, energy etc have come to benefit from the development assistance spanning more than 5 decades. Of late, US cooperation is also geared towards the institutionalization of peace and democracy and protection and promotion of human rights in accordance with its country strategy document. The US cooperation has equally been instrumental in the fields of human resource development and institution building.

There have been regular exchanges of visits and sharing of expertise and experiences between the armies of the two countries in the area of training, disaster management, logistics management, counter terrorism, interoperability and so on.

Trade/Investment

The US is one of the important trading partners of Nepal. It is also the biggest source of hard currency for Nepal primarily from the export of garments and carpets as well as from tourist incomes. After the end of the quota system under Multi-fibre Agreement (MFA) in 2004 the export of Nepali readymade garments to the United States of America has declined significantly. Nepal has been consistently advocating for duty-free facilities for its exports to the US, especially the readymade garments.

Following is the position of trade balance with the US, which shows a favourable balance of trade most of the time:

Value in Rs. ‘000

YearExportImportBalance
2012

2013

2014

2015

2016

5,141,836

6,531,238

7,806,483,315

8,415,217,476

4,642,439,205

4,757,639

5,498,613

6,867,459,065

7,869,054,024

5,600,845,065

384,197

1,032,625

939, 024, 310

546, 163, 4522

-958, 405, 860

                     

2015                                             

2016                                              

(Source: Trade and Export Promotion Centre, Nepal)

Trade Preferences for Nepal: Trade Facilitation and Trade Enforcement Act 2015 (H.R.1907)

The duty-free program, specially designed for Nepal, came into effect on December 15, 2016 following introduction of the US Trade Facilitation and Trade Enforcement Act by former US President Barack Obama. The Act was introduced to support Nepal’s economic recovery in the aftermath of devastating 2015 earthquakes.

Under this program, 66 Nepali products are granted duty-free entry into the US till December 31, 2025. This means goods like carpets and rugs, shawls, scarves, luggage articles, handbags, pocket goods, such as wallets, travel bags and other containers, headbands, blankets, hats and gloves, which previously used to be subject to tariffs ranging from 5 percent to over 20 percent can now enter the US market at zero tariff. However, such goods must be grown, produced, or manufactured in Nepal, with the cost of the Nepali materials plus the cost of processing standing at at least 35 percent of the product’s sales price.

Millennium Challenge Corporation

Nepal is selected as an eligible country for Compact

Nepal joined MCC in 2010 when it was considered eligible for its “Threshold Program”, after passing through a scorecard consisting of 20 indicators related to political, economic and social situation of the country. Threshold Program aimed to assist a country in becoming compact eligible by supporting targeted policy and institutional reforms. MCC works with Threshold Program – eligible countries on these reforms through country-specific threshold program.

In December 2014, MCC decided to include Nepal for its Compact Development Program, The Readout of the MCC’s Board of Directors mentioned: ‘Nepal has consistently passed the scorecard criteria for the past four years and continues to demonstrate clear progress in institutionalizing democratic processes’.

At present an MCC Compact for Nepal (worth 630 million USD) is under consideration and is likely to be signed by Nepali and the US authorities soon.

Tourism

The numbers of tourist arrival from the US to Nepal in the past years are as follows:

YearNumber of Tourist
2011

2012

2013

2014

2015

37,832

48,985

47,355

49,830

42,687

US Peace Corps Volunteers

The Peace Corps Nepal, which temporarily suspended its operations and activities from September 2004, has resumed its operations from January 17, 2012. The volunteers have been working in rural areas in various sectors including teaching in schools.

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